Argentina was recently in the news for being in trouble with the International Monetary Fund (IMF). It seems that the IMF, and many others, have an issue with the truthfulness of Argentina's government issued statistics, particularly with the stated inflation rate. In 2012, the official inflation rate as determined by the government was 10%. However, many private economists, both in Argentina and elsewhere, think the actual inflation rate is around 25% per year.
For the multinational looking at countries to locate operations, including Shared Services, the actual and expected inflation rate for a country is a critical factor in determining labor costs. To that end, it's critical to have an understanding of the true economic factors of a country and city before committing to a long-term presence there. So if you can't completely trust a country's published economic information, how can a company be sure that the data, particularly labor costs, it incorporates into its business case are reliable? Here are three ways to corroborate, or refute, labor cost information published by a government:
- For a first cut look at salaries, there are free resources such as Glassdoor that can give you some sense of the salaries in a particular country or city. This data is unlikely to meet all of your data requirements, but it can give you a sense if the government published numbers are reasonable.
- For a more comprehensive survey of global salaries, you can purchase information from companies that specialize in this type of information. One example is Mercer, and their global salary survey.
- A third option, if you have access to a consulting firm, is to get their take on particular countries and cities. As an added bonus, they may be able to set up a call with one or more of their clients in that country or city to get a first hand assessment of life on the ground.
These options are by no means mutually exclusive, and it's likely that you'll incorporate one or more of them into your analysis. It's important not to take government statistics at face value, even for more industrialized countries. It's important to trust but verify.